The court can grant injunctive relief to prevent an unfair term in standard consumer contracts from being enforced in existing as well as future contracts.
In Office of Fair Trading v Foxtons Ltd, the Office of Fair Trading (OFT) challenged the fairness of certain terms in the defendant estate agent's standard form of contract. The OFT used the procedure set out in the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations) for "general challenges" i.e. challenges by bodies not party to the contract complained of. The OFT sought an injunction to prevent the defendant from enforcing the relevant terms in existing contracts. At first instance, the judge declined to grant the injunction holding that the defendant should not be prevented from enforcing individual contracts already entered into as, although the term might be unfair on a general challenge, it might be fair in the particular circumstances of the contract entered into. The OFT appealed, arguing that the Council Directive, which the Regulations implemented, supported the view that general challenges related to future and existing contracts.
The Court of Appeal agreed with the OFT holding that it would be inadequate protection for consumers if the court, having found a term unfair on a general challenge, had no power to prevent enforcement of that term in current contracts. A general challenge could relate to a term in a current as well as future contract and the courts did have the power to prevent continued reliance on that term by a supplier against a consumer. The OFT was entitled to an injunction to prevent enforcement of the terms in current, as well as future, contracts.
Things to consider
Both individuals and bodies such as the OFT can challenge the fairness of any terms in standard consumer contracts. With a general challenge, the effect of any finding is going to be much wider especially when, as per this decision, it can affect contracts already entered into – which could be numerous – as well as those going forward.